Monthly Archives: March 2012

We talked about Short vs. Long trading. Several members asked about short selling throughout the semester and we decided to do a tutorial to help everyone understand it better.

Firstly, long selling, is basically what we are doing with our portfolio. In long selling, one purchases the stock and holds it for a long time expecting its value to increase. On the other hand, short selling means the selling of a stock that the seller doesn’t own. More specifically, a short sale is the sale of a security that isn’t owned by the seller, but that is promised to be delivered. In another words, when you short sell a stock, you borrow stocks from your broker and you sell the shares sooner or later, you need to buy back the same number of shares and return them to your broker. If the price drops, you make a profit on the difference. If the price of the stock rises, you have to buy it back at the higher price, and you lose money.

Short selling, is the opposite of long selling. Investors want a decrease in value of the stock and want the company to perform poorly so you can profit from the difference in prices at the same time.

The two main reasons people decide to short sales are to speculate or to hedge.

Because the nature of short selling is against the market, SEC has been trying to establish more rules to regulate this sector of financial market. For example, SEC has more specific requirements and standards for setting up a margin account which is an essential step in the short sell transaction.

There are different reasons for investors to choose long term investment or short selling. Long term has fewer risks compared to short sell.

Compared to risks of economy and the risk of inflations of long term investment, the frequent transaction involved might help investors gain some purchase power. At the same time the downside could be severe for short sell. Since it’s short sell, one cannot stay in the short sell state for a long period and the general trend of market is growth which will be a disaster for short seller. The loss can be infinite as the stocks do better while the profit is limited plus heavy transaction fees and insurance leverage. Short squeeze can wring the profit out of your investment. When you take everything into account, you could do the right thing at the wrong time, such as the dot.com bubble in early 2000. There are also limits on the types of funds that can process short sale.

Last but not least is the ethical problem. It’s safe to say that short sellers are not popular people on Wall Street because they make money in bear market. Although there are illegal practices of “short and distort” involved in short sell, we should remember the contributions of short selling to the general financial market. Short selling helps increase liquidity and unbiased observations of companies as well as working at the front line of finding financial fraud in companies.

If you would like to know more about definition of short vs long and how they differ, you can visit Investpedia.com to learn more.

Don’t forget that we will have our election next week. Come and support and be part of OIG next year. Everyone’s vote counts.

Welcome! Today is the 29th of February of 2012. A very special Wednesday as it is our last meeting before break.

Following last week’s club function, we had another group called “She Is The First”. The founder worked at 17 fashion magazine. “She Is The First” is an organization that provides support to first generation students going to college. The group is planning to have a fund raising event at Thomas Great Hall. The group will seek help from The Graduate School of Social Work to help make this event happen. They will try to use the funds raised to cover the travel and food at event and they will also try to invite the founder to the event and they will be responsible for the Amtrak, night-time event. They already received $600 from SGA, but they will need $1000 in total so they need an additional $400. The group is also contacting the Dean’s Office and Graduate School of Social Work to get support for this event. The presenter from the group is to cover food expenses, and she will try to find a restaurant that offers a reasonable price with prior experience at Bryn Mawr. They plan n using the food as an incentive to make people attend the event.

This week, we will introduce a new way to present the “Word of The Week”, by including the word in the article. This week, we talked about EV/sale. Low EV/sale is more attractive. When the ratio increases, it means there is more demand for goods.

Evelyn did a presentation about Apple Inc. Today’s price was 542.44. We looked at a graph showing change in the past 52 weeks. Our portfolio displaced a broadened gap between our good-performance stocks Apple and bad-performance stocks, Exxon Mobil. We figured, with the coming release of the Ipad 3 on the March 7th, the performance of our Apple stocks will be steady and strong. The new iPad will have an improved camera and 10 hour battery life. High growth of Apple has a 19% global cellphone and is expecting expand in global arena. Apple also accumulated lots of cash and we are expecting the price to reach 600 soon and 700 at the end of the year. There is plenty room for growth .

The first club is MUN. Same as last smester, they are planning t go to this semester’s MUN conference in New York. They are asking OIG for 200 dollars to cover their accommodation costs in New York. This two-day event will be held at New York city and they are trying to minimize the cost for each member to include as many members as possible. They already have 400 dollars from SGA and they are asking 200 dollars from OIG to make up the rest of cost. The total cost for accommodation is 600 dollars.

MUN club decided to cover the transportation costs, which is MegaBus with funding from SGA, and cover the delegation fees per person.

Next we have two clubs asking for funding to sponsor two on-campus performances. One is Pulso Latino. They are asking for funding for their annual culture show. They are planning to host a culture show in the Goodhart theatre. They will also order catering for special Latino food. They already have funding from SGA to cover the most cost of culture show. This additional funding that they are requesting will enable them to have better food at the show and attract more students to the show.

Another group asking for funding is Mujeres. Their club budget is tight because they missed the chance to get funding from SGA. This is a Latino affinity group. They are planning to have a dance workshop and a showcase. They are trying to get as much funding as possible as this is their biggest event this year.

Members had a discussion about the amount of funding for each club and studied their respective budget worksheets to figure out the actual amount needed.

We had our first tutorial about a new approach to the new stock. We gave a shot introduction about fundamental and technical analysis. All the board members will give you a brief introduction on some perspectives in these two analysis methods. Our primary sources of this a wonderful website that is good for beginning investors as well as beginning learners in financial market.

Fundamental Analysis, also called the traditional qualitative analysis, is a method of evaluating a security that entails attempting to measure its intrinsic value by examining related economic, financial and other qualitative and quantitative factors. Fundamental analysts attempt to study everything that can affect the security’s value, including macroeconomic factors (like the overall economy and industry conditions) and company-specific factors (like financial condition and management).

On the other hand, technical analysis is considered as a quantitative analysis. It is a method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume. Technical analysts do not attempt to measure a security’s intrinsic value, but instead use charts and other tools to identify patterns that can suggest future activity.

We also talked about some important measurements of the stock such as PE, EPS vlue and analysis about the general performance stock over time. For more knowledge about these two methods, you can go the website of Investpedia to watch many examples and videos to explain the difference by simple demonstrations.

Even though there are many indicators in both analysis methods. There is nothing that will tell you the exact stock to buy or the future performance of the stock as there are so many variables in the stock market.

Welcome back! Thanks for coming to this semester’s OIG. As usual we will meet on Wednesday night at Taylor G. This semester, we will have more interesting events and learning experiences for all the members.

Throughout the semester, OIG will continue promoting more awareness on campus and please let is know if you have any ideas as to how to make OIG better known throughout campus. During this semester, we will continue to have workshops to teach members more about financial markets and tools to evaluate the values of stocks and help members to develop their own choices of portfolios. Also, we will encourage members to do presentations about their choices of stock and do evaluations about their choices and suggestions will be considered by all the members. It’s your chance to make your contributions to the club and make a difference in our portfolio with OIG’s real money.

During the semester, we will also have our club donations and NYC trip. We will be visiting different firms this semester and please submit your top choices of firms that you will like to visit and OIG will work towards making it happen.

In summary, welcome back. We are looking forward to a new semester with you and helping to prepare you for possible future plans in any of the financial fields.